Random Wrap: Tech and Apparel: Buyout Firms Try It On and Plug It In

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Even though the middle of August is traditionally a slow time for investment activity, buyout deal flow is actually beginning to pick up. And while the industries in which firms are active continue to run the gamut, technology and apparel have received a particular amount of attention over the last few weeks.

Open Dressing Room

Firms to recently complete or sign buyout deals in the apparel area include Saunders, Karp & Megrue, Audax Group, Catterton Partners, Mercantile Capital and Berkshire Partners.Boston-based Berkshire Partners’ purchase of Investcorp’s William Carter Co. stands out above the rest, however, primarily for it’s size. Out of a $450 million transaction price, Berkshire committed $150 million in equity to bring the company into its retail portfolio.

Investcorp held William Carter for more than four years and put it up for auction earlier this quarter. Christopher O’Brien, a member of Investcorp’s management team, said Berkshire won out because of its experience in retail and apparel.

The company, which saw more than $470 million in revenue last year, has the potential to go public in the next couple of years, O’Brien added.

Tech Time Again

While technology companies yo-yo up and down on the Nasdaq, buyout firms are reaping the benefits as their valuations become more stable and reasonable. While groups solely focused on technology, such as Francisco Partners and Silver Lake Partners which both raised funds last year, wait out the storm, other smaller groups, which have actually been in the business longer, have jumped right in.

Competing Los Angeles firms Gores Technology Group and Platinum Equity, headed by brothers Alec Gores (Gores) and Tom Gores (Platinum), have both been busy. Each of these is doing well because they each focus on distressed assets.

Gores Tech in June agreed to purchase the neglected PC division of Micron Electronics and Hewlett-Packard‘s VeriFone, both for undisclosed amounts.

Platinum Equity has made bets on Amisys 3000 and Pathways Managed Care, buying both from McKesson HBOC. The firm also agreed to acquire Motorola‘s Multiservice Networks Division.

Sources say more public-to-private tech deals are likely in the coming months.

Leslie Green can be contacted at Leslie.Green@tfn.com